Sydney house prices drop for first time in 17 months

Sydney house prices drop for first time in 17 months

Figures released by property analytics firm CoreLogic reveal house prices in Sydney have dropped for the first time in more than a year, reports The Guardian

The 0.1 per cent fall marked the first time Sydney’s property market has gone backwards in 17 months.

In contrast, Melbourne and Hobart continued to record strong growth in September,

Across Australia, combined capital growth was only 0.7 per cent during the quarter down from peaks of 3.5 per cent less than a year ago in December 2016.

CoreLogic said the figures showed the housing market was “clearly losing steam” and that tighter lending rules were affecting the market.

“This slowing in the combined capitals growth trend is heavily influenced by conditions across the Sydney market where capital gains have stalled,” said CoreLogic Head of Research Tim Lawless told Business Insider.

“Across the Sydney housing market, it was the detached housing sector that pulled the monthly and quarterly growth rates lower,” he says.

“While unit values are also appreciating at a slower rate, detached housing values were 0.3% lower over the month of September and 0.2% lower over the quarter while unit values recorded a subtle rise.”

Lawless said that affordability constraints may explain the recent divergence between house and apartment prices.

“Potentially the affordability challenges facing Sydney buyers within the detached housing sector are pushing more demand towards the medium-to-high density sector, where, based on median values, houses are almost $290,000 more expensive than units,” he says.

The news of a slowing market will likely be welcomed by regulators. The Australian Prudential Regulation Authority has sought to tighten interest-only mortgage lending and the Reserve Bank of Australia has warned about the rise in household debt.

Hobart remained the hottest housing markets across the country, growing by 14.3 per cent over the last year, the fastest of any capital city over the same period.

Prices in Melbourne—Australia’s fastest growing city in terms of population increase—also rose strongly, jumping 0.9 per cent over the month, leaving the increase on a year earlier at 12.1 per cent.